For all the chip and tech controls the U.S. has put on China, Huawei has been killing it of late. New small foldable phone (Pura X) and more recently the Matebook Fold laptop. https://www.bloomberg.com/news/features/2025-06-03/huawei-pura-x-foldable-phone-with-harmonyos-review-price-features

China Morning Missive “China has no choice” ….. perhaps, but then again what does it mean to be a reliable partner. When the trade conflict went hot with China (and the entire world frankly) in early April, I felt confident that the Trump team didn’t have any idea of what it was they were heading into. China had spent four years preparing for exactly what Trump was preparing to do. Lessons were learned from the 2018 trade conflict and preventative steps were taken. Well, watching how event have played out over the past three months demonstrates that Team Trump was even far less prepared that I’d expected. There are no immediate points of pressure the US can apply on China, unlike virtually all other trading partners. The Europeans, Japan, S.Korea, you name it. All have, in some way, shape or form, dependencies on the US. Rare earth minerals are the pain trade and the export controls out of China are now starting to pinch American manufactures. The only question, at least for myself, is what concessions Trump/Bessent will make for China to resume exports. I suspect we will have a clearer idea in two weeks, or perhaps less. China isn’t the party left with no choice. It’s America that will need to move first. https://www.bloomberg.com/news/articles/2025-06-03/bessent-says-china-has-a-choice-on-being-a-reliable-partner?utm_source=website&utm_medium=share&utm_campaign=copy

Here’s another quick #China update. There was a sudden surge in gold buying here in Shanghai over the weekend. You can see here in the attached video. The catalyst was a round of household vouchers issued by the local government. Basically, a series of different vouchers were made available including Rmb150 on a Rmb500 purchase all the way up to Rmb1,000 for a Rmb10,000 purchase. In the very savvy Chinese fashion, rather than use the vouchers for the intended purpose, to incentivize consumer discretionary spending like washing machine or clothing or some other more typical consumer item, the vouchers were used to buy gold. No prohibitions were made on how the vouchers were to be used. The gold shops even got with the program promoting the opportunity. Most point-of-sales were between 1 and 5 grams.

Wanted to provide a bit of broader context to the ongoing tension between China and America. Agree of disagree with the approach taken, consider for a quick minute the following moves made by the Trump team over the past four months. 1. In February, the American First Investment Policy was announced. The document made it clear that Chinese investment was no longer welcome in the United States. We are talking a couple of trillion USD. 2. Last week, the State Department announced that Chinese student visas would come under review and many should expect to be revoked. So, first it was “we don’t want your money” now it became “we don’t want your people either”. Last I looked, capital and labor were two pretty important variables for economic growth. I also wonder how many Chinese remained in the US after studying and how many were - in some way - responsible for all of the technological advances made over the past 20 years. But I digress. 3. Finally we have SecDef Pete Hegseth speaking in Singapore over the weekend where he called out China, or rather “the imminent threat of China.” That was a speech that most have viewed as very poorly timed. Take all of these developments in total and ask yourself; if I was running Beijing, do I genuinely believe that my counterparty is acting in good faith? Make no mistake. China has taken full advantage of, even abused, the “rules based order”. There are no good guys here. I’m just raising the issues and looking to demonstrate how the boys in Beijing might be thinking. I would also end here with the following. Up to this point, China hasn’t even begun playing hardball. Recall the PPE export controls in 2020 and just go from there. America has countless pressure points. https://finance.yahoo.com/news/china-rare-earths-grip-gives-151513862.html

China Morning Missive You’d think there’s genuine drama going on here. That might be the case in Washington, but it’s just another Tuesday here in China. It was three months ago when the Trump team said that a call with Xi was coming any day. That never transpired and all that followed was bellicosity via social media. Trump was then bombarded by Walmart and Costco making it clear that the shelves would be empty in a matter of weeks. Voila! A meeting is then announced in Geneva. The parties both said that progress was made. Thing is, the Chinese decided to slow roll access to rare earth minerals. For me, it was a test to measure the level of desperation on the American side. Seems that desperation was rather intense. And thus began round two of the Trump rage machine. In case you had any doubts, there won’t be any call, at least there’ll be no call initiated by the Chinese side. American buyers continue to scramble to place orders with Chinese producers before tariffs are - inevitably - returned to the +100% level. It is a mad scramble based on the people I’ve been talking to over the holiday weekend. Perhaps all of this is to say, volatility is back in play. https://www.reuters.com/world/china/trump-chinas-xi-will-likely-speak-this-week-white-house-says-2025-06-02/

Three years ago to the day, the Shanghai lockdown was lifted.

China Morning Missive A quick one today. To the point, what China did for the EV it is going to do with humanoid robots. Critical for the development is addressing the often raised issue of “the demographic time bomb”. Videos are all over Chinese social media of the advancements made. https://www.bloomberg.com/features/2025-china-ai-robots-boom/?ai=eyJpc1N1YnNjcmliZWQiOnRydWUsImFydGljbGVSZWFkIjpmYWxzZSwiYXJ0aWNsZUNvdW50IjowLCJ3YWxsSGVpZ2h0IjoxfQ==

While EV charging is, of course, an option here in #China you can also just go and have your entire battery changed out on roughly 6 minutes.